China

The size of China’s stock market has made it a stalwart of investment sentiment. Significantly, China’s blue chips are leading the march of Chinese equities back into positive return territory. The rebound has been across all sectors. Chinese shares in industry benchmarks such as Alibaba (BABA), China Petroleum (SNP) and China Lodging (HTHT) are all up.What to Know Before Buying Chinese EquitiesChina’s stock markets have been operating under emergency measures enacted to bolster stock prices after several market corrections in 2015. A six-month ban was imposed on stock sales by those with more than a 5% interest in a Chinese public company. Short selling and initial public offerings have been reigned in. These measures would have minimal impact on the average investor.Getting Started With Investing in Chinese SharesForeign investors can invest in B shares on China’s Shanghai and Shenzhen stock exchanges. These shares are traded in US dollars on the Shanghai exchange and Hong Kong dollars on the Shenzhen exchange, but their face value is listed in Renminbi. A shares are sold to Chinese investors and are denominated in Renminbi. Chinese investors can also trade A shares in the secondary market.How the Chinese Stock Exchange WorksChina’s stock market is accessible to foreign investors through a special class of shares, as noted above. Traditionally, only major institutional investors had access to this market. In 2014, the Hong Kong Stock Connect opened the Shanghai market to foreign investors.China’s stock markets are second in size only to the New York Stock Exchange. Together, the Shanghai and Shenzhen exchanges trade about $14 trillion in securities. The Shanghai exchange is home to many of the Chinese blue chips, as well as state-owned firms such as resource and financial companies. The Shenzhen exchange hosts a diverse range of companies, including high growth technology firms.

Many Chinese firms can still be found on the Hong Kong Stock Exchange (HKSE), which was the only regional exchange for many years. Large Chinese state-owned companies listed on the HKSE as H shares. Today, when one speaks about Chinese listings, the reference is to the mainland Chinese exchanges.Best Investment Strategies for a Wild 2016